Be certain to read the fine print when signing up to purchase mutual funds as Wall Street scams never fail to surprize me. A recent MSN money article ‘Is Your Mutual Fund Worth Its Fees’ reveals a shocking truth – many active money managers are simply “closet indexers” — wow, actively managed index mutual funds. These managers charge a typically high mutual fund fee of 1.5% or more for essentially mirroring a given index. The investor gets hit with a double whammy: a failure to outperform the benchmark (the essential promise of active management) and high fees for index like returns. All the while these same indexes can be purchased at a tenth the cost with better tax efficiency through ETFs. All you beginners to the world of mutual funds, take a tip from Investing 101 — read the fine print. Understand what is inside your fees.
